How Can I Get a Lower Car Loan Interest Rate?

Blog Jul 21st, 2022

Two men talking about interest rates at a desk

Who wouldn’t want lower car loan interest rates while thinking of buying a new car? Buying cars is, anyway, a substantial financial commitment, so to help you save some dollars on your monthly loan payments, Southbank Dodge has come up with a few tips to get the lowest interest rate on your car loan. Continue reading to learn how making larger down payments and maintaining a good credit score can help you achieve your ideal car loan interest rates.

Maintain a Good Credit Score

You only qualify for a better interest rate when you have a good credit history, among other factors. Credit score and interest rate share an inverse relationship, meaning the higher your credit score, the lesser the interest rate you’ve to pay on your auto loan. Make sure to pay your bills on time, stay below your credit limit and maintain a long credit history to improve your credit score.

Enlist a Cosigner

If you have a poor credit score, try contacting a trustable family member or friend with a good credit history. This way, you can borrow their stable and sound financial standing to get better interest rates on your auto loan.

Make a Greater Down Payment

Though it’s not possible for all, you can consider this to get a better interest rate. A bigger down payment means you need to borrow a lower amount of auto loan from a lender, such as a bank, which eventually subsides the interest rate. When you borrow a smaller amount, it poses less risk to a lender, which ultimately encourages it to give you low-interest rate benefits.

Keep Your Repayment Term Short

Having a long repayment term seems like a safe option to many, but it is not the ideal option to go with. When you choose a longer period, you tend to pay more interest and vice versa. A shorter repayment term may appear financially straining, but it helps you save on the interest rate and monthly payments. Plus, when you choose a shorter term, the lender will have a low risk, meaning it will be willing to give better interest rates.

Visit the Southbank Dodge for Great Financial Advice

Our experienced and trained financial advisors are happy to assist you with different financial needs and guidance. We work closely with our clients to find the best solution to help get a lower interest rate on your car loan. You can visit our website for a free credit check, helping you make an informed decision while applying for financing a car. Book an appointment with our financial advisors or visit our showroom in Ottawa to learn how you can rebuild your credit history or maintain a good credit score.